Aged care funding: On the road to entrenched inequity

Apr 12, 2024
Young caregiver helping senior woman walking. Nurse assisting her old woman patient at nursing home. Senior woman with walking stick being helped by nurse at home. iStock/ Ridofranz

UK Health Minister Aneurin Bevan introduced the National Health Service (NHS) pointing out that “Illness is neither an indulgence for which people have to pay, nor an offence for which they should be penalised, but a misfortune the cost of which should be shared by the community.”

Advancing age brings with it infirmity and a much higher likelihood of ill health. People do not choose to become old and infirm.

Whilst conservatives despise the sentiments expressed by Bevan, particularly the concept of sharing by the community, liberals do agree, but with very variable degrees of commitment.

Aged Care is a major concern. Recent discussion following the Royal Commission has been about what services should be provided, how to regulate quality, how to get appropriate workforce, and how to fund what is needed.

The main funding recommendations from the recently released Aged Care Taskforce report are means tested co-payments and a safety net to supplement ongoing government funding.

Examples of co-payments and safety nets

The public hospital system provides first class hospital care to all and if it’s an emergency the care will be timely. If not, unacceptable wait times prevail. Public hospital care becomes a safety net. Those with means bypass the wait times and use the government subsidised private hospital system. Those without suffer.

Primary health care through GPs or other health providers is in theory accessible to all, except for the geographical inequities which have the greatest negative impacts on low-income earners in rural and remote locations. But even in the cities inequities abound. Co-payments make a mockery of affordable access to care. The recently introduced increased rebates for pensioners, health care card holders (HCCH), and children does not mean they will be bulk-billed. It also leaves people just above the cut-off for an HCCH facing an average $40 co-payment per GP visit.

Visits to specialist physicians and surgeons regularly incur a $100 co-payment which sends many patients away and onto the years long waiting list at a public hospital.

A rebate subsidised psychology visit regularly costs $100 co-payment, well outside the affordability of an unemployed patient on sickness benefits, and a challenge to a low wage earner.

The above relate to voluntary co-payments applied by providers. Then there are government-imposed co-payments with safety nets. Prescription drugs are subject to co-payments of $7.30 per prescription for Pensioners and HCCHs and $30 per prescription for others. Despite the existence of a Safety Net, an estimated half a million people delayed or did not fill a prescription in 2021 according the Australian Bureau of Statistics Patient Experience Survey.

No Australian Government in recent history has delivered equity through a co-payment system. Equity in health has been defined by Starfield as ‘the absence of systematic and potentially remediable differences in one or more aspects of health across populations or population groups defined socially, economically, demographically, or geographically.’ The definition could be easily applied to Aged Care and education.

Conservatives are not interested in equity. Successive Labor Governments however, have also shown a lack of commitment. Many Labor politicians would describe themselves as social liberals. Perhaps this lack relates to the reality that equity is not at the heart of any form of liberalism. It is an optional extra, talked about by social liberals as an aspiration, but falling second to the priorities of the individual.

Problems with co-payments, fee-for-service

Co-payments limit access to items of care. The size of the co-payment is at the whim of the provider or the Government. A Labor Government, led by Julia Gillard from the left faction, introduced a GP co-payment for economic reasons, knowing such payments would be inequitable. The vagaries of economic and political factors determine how much and who will pay.

To determine a co-payment, one needs an item of care. There are some situations where itemised care with appropriate caveats can help to determine appropriate payments. Itemised care, especially in primary health care and Aged Care, leads to a siloed approach, which is completely at odds with the complex care needs in Aged Care and chronic disease. It limits teamwork, including teamwork which involves the consumer/patient interaction with the provider team.

Problems with safety nets

Look at a net. It has holes in it. It sags. It has edges. One could regard the Aged Pension as a safety net. Imagine being a 70-year-old widow whose only work throughout life was low paid, and whose rental cost is 50% of her pension. She has rental assistance, another safety net. She lives below the poverty line.

The Safety Net for prescription drugs helps. But a 20-year-old couch surfer, living with a mental illness, doesn’t register for the net. Even if he did, it doesn’t cut in until he’s spent a certain amount. How does he afford his drugs until then?

The vagaries of economics and politics determine the level and quality of safety nets.


Firstly, when the more powerful and articulate in a community are not subject to the inadequate service provisions of health, Aged Care, and education because they buy their way past such inadequacies, their advocacy for improvements in the system for all is weakened. The safety net sags lower.

Secondly, to adapt Aneurin Bevan’s 1948 quote regarding introducing the NHS: No society can legitimately call itself civilised if an elderly and infirm person is denied Aged Care because of lack of means.

Thirdly, inequity is entrenched with every introduction of a user pays, means tested co-payment system with safety nets. If Labor does not want inequity, the alternative is funding through an adequate progressive revised tax system.

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